If you do not qualify for the relief discussed earlier under
Relief from liability arising from community property law
and are now liable for an underpaid or understated tax you believe should be
paid only by your spouse (or former spouse), you may request equitable relief.
To request equitable relief, you must file Form 8857, Request for Innocent
Spouse Relief. Also see Publication 971.

If you are a United States citizen or resident alien and you
choose to treat your nonresident alien spouse as a U.S. resident for tax
purposes and you are domiciled in a community property state or country, use the
community property rules. You must file a joint return for the year you make the
choice. You can file separate returns in later years. For details on making this
choice, see Publication 519, U.S. Tax Guide for Aliens.

If you are a U.S. citizen or resident alien and do not choose
to treat your nonresident alien spouse as a U.S. resident for tax purposes,
treat your community income as explained next under
Spouses living apart all year.
However, you do not have to meet the four conditions discussed
there.

If you are married at any time during the calendar year, special
rules apply for reporting certain community income. You must meet all the
following conditions for these special rules to apply.

You and your spouse lived apart all year.

You and your spouse did not file a joint return for a tax
year beginning or ending in the calendar year.

You and/or your spouse had earned income for the calendar
year that is community income.

You and your spouse have not transferred, directly or indirectly,
any of the earned income in condition (3) above between yourselves before the
end of the year. Do not take into account transfers satisfying child support
obligations or transfers of very small amounts or value.

Treat earned income that is not trade or business or partnership
income as the income of the spouse who performed the services to earn the
income. Earned income is wages, salaries, professional fees, and other pay for
personal services.

Earned income does not include amounts paid by a corporation
that are a distribution of earnings and profits rather than a reasonable
allowance for personal services rendered.

George and Sharon were married throughout the year but did not
live together at any time during the year. Both domiciles were in a community
property state. They did not file a joint return or transfer any of their earned
income between themselves. During the year their incomes were as follows:

George

Sharon

Wages

$20,000

$22,000

Consulting business

5,000

Partnership

10,000

Dividends from separate property

1,000

2,000

Interest from community property

500

500

Total

$26,500

$34,500

Under the community property law of their state, all the income
is considered community income. (Some states treat income from separate property
as separate income—check your state law.) Sharon did not take part in
George's consulting business.

Ordinarily, on their separate returns they would each report
$30,500, half the total community income of $61,000 ($26,500 + $34,500). But
because they meet the four conditions listed earlier under
Spouses living apart all year, they must disregard community property law in reporting all
their income (except the interest income) from community property. They each
report on their returns only their own earnings and other income, and their
share of the interest income from community property. George reports $26,500 and
Sharon reports $34,500.

If you and your spouse are separated but do not meet the four
conditions discussed earlier under
Spouses living apart all year, you must treat your income according to the laws of your state.
In some states, income earned after separation but before a decree of divorce
continues to be community income. In other states it is separate income.